PART B: Terms and Conditions of a Call for Bids North of 60° - Common to All Regions

The management of oil and gas resources north of latitude 60°N offshore and in the Northwest Territories and Nunavut is a federal responsibility. This responsibility is carried out by the Northern Oil and Gas Branch of the Department of Indian Affairs and Northern Development.

1. Acceptance and Agreement

- Canada Petroleum Resources Act s.s. 24.1

Any submission of a bid in response to a Call for Bids shall be made on the understanding that the terms and conditions as contained herein are accepted and agreed to by the bidder. Such understanding shall include the acceptance of and agreement with the terms and conditions contained within the form of the Exploration Licence and with the Benefits Statement of Principles.

2. Exploration Licence

- Canada Petroleum Resources Act s.s. 14.3 (a)

Any exploration licence which may result from a Call for Bids will be issued pursuant to the Canada Petroleum Resources Act, R.S., 1985, c. 36, 2nd supplement, or legislation made in amendment thereof or in substitution therefor and any regulations made thereunder from time to time.

Term

- Canada Petroleum Resources Act s.s. 14.3 (c)

The term for exploration licences issued is stated in Part A of the Bid Package.

3. Submission of Bids

- Canada Petroleum Resources Act s.s. 14.3 (e), (f)

Calls for Bids remain open for at least 120 days following publication in the Canada Gazette.

Sealed bids must be delivered, either by registered mail or in person, to the following address prior to NOON, Mountain Time on date specified in Part A of the Bid Package:

Compliance Information Analyst
National Energy Board
Frontier Information Office
444 Seventh Avenue S.W.
CALGARY ALBERTA T2P 0X8

Bid(s) submitted in response to a Call must be addressed to the Minister of Indian Affairs and Northern Development and be in double sealed envelopes bearing no corporate identification. The outer envelope should be clearly marked with the date and Call name. The inner envelope(s) should be clearly marked with the date, Call name and parcel number.

View the Bid Submission Form.

To be accepted, bids must be accompanied by separate financial instruments in respect of the issuance fee (clause 6) and the Bid Deposit (clause 10(a)).

4. Bid Selection Criterion

- Canada Petroleum Resources Act s.s. 14.3 (g)

Selection of the successful bid will be made on the basis of a single criterion, namely, the total amount of money that the bidder proposes to spend doing exploratory work on each parcel within Period 1 of the term of the exploration licence (Work Proposal Bid).

5. Minimum Bid

- Canada Petroleum Resources Act s.s. 14.3 (d)

Work proposal bids of less than $1,000,000.00 for each parcel will not be considered.

6. Issuance Fees

- Frontier Lands Registration Regulations s.s. 15

Issuance fees of $250.00 per grid, or portion thereof, must be submitted with the bid by separate cheque made payable to the "Receiver General for Canada".

7. Environmental Studies Research Fund (ESRF) Levies

- Canada Petroleum Resources Act s.s. 81

Exploration licences are subject to the payment of ESRF levies in accordance with section 81 of the Canada Petroleum Resources Act. Where applicable, the ESRF manager will send notices to the interest holders.

8. Work Requirement

- Canada Petroleum Resources Act s.s. 14.3(c)

The drilling of one (1) exploratory or delineation well prior to the end of Period 1   of the term is a condition precedent to obtaining tenure to Period 2.

Such a well should reach a depth sufficient to evaluate a prospective horizon as described in the geological prognosis in the application for Authority to Drill Well.

Where a well has been commenced and drilling is being pursued diligently, Period 1 shall continue until the well has been completed. Period 2 shall be reduced accordingly.

Failure to drill a well on the lands by the end of Period 1 will result in the termination of the Exploration Licence. Consequently, lands revert to the Crown.

9. Drilling Deposit

The interest owner may, at its option, in order to meet the work requirement, extend Period 1 for one year by posting a drilling deposit, in the name of the Receiver General for Canada with the Northern Oil and Gas Directorate of the Department of Indian Affairs and Northern Development, before the end of the last year of Period 1. Where Period 1 is extended by the posting of a drilling deposit, Period 2 shall be reduced accordingly.

This drilling deposit shall be in the amount of $1,000,000.00 and in a form acceptable to the Department. If a drilling deposit is posted, it will be refunded in full if the licence is validated as required to obtain tenure for Period 2 by the drilling of a well. If a validation well is not drilled or has not been commenced within the one year extension, the drilling deposit will be forfeited to the Receiver General for Canada upon the termination of the licence at the end of Period 1. If a well has been commenced and drilling operations are being diligently pursued, Period 1 will continue until the well has been completed. Allowable expenditures cannot be applied against the drilling deposit.

As a result of the extension of Period 1 by the posting of a drilling deposit, rentals payable in Period 2 will be applicable at the following rates, for the first year after the extension, at $5.50 per hectare and all subsequent years at $8.00 per hectare. All other rental provisions remain applicable.

10. Deposits

1. Bid Deposit
   
   
   1. Each bid must be accompanied by a bid deposit for the specific parcel in the amount of $10,000, in the form of a certified cheque, money order or bank draft payable to the "Receiver General for Canada". Each bid deposit must relate to a single parcel.
      
      
   2. Bid deposits will be returned to unsuccessful bidders, without interest, following announcement of the winning bidder(s).
      
      
2. Work Deposit
   
   
   1. The successful bidder will be required to post 25% of the work proposal bid as security for the performance of work within 15 working days. This period commences the day following the notice of winning bids being posted on the Northern Oil and Gas Branch website. This deposit will be referred to as the work deposit.
      
      
   2. Failure to post the work deposit as security for the performance of work will result in the cancellation of the bid, forfeiture of the bid deposit and disqualification of the bid. In that event, the Minister may, if he sees fit, award the Exploration Licence to the second highest bidder without making another Call for Bids.
      
      
   3. The bid deposit ($10,000) will be returned to the winning bidder once the work deposit is received by the Rights Administrator.
      
      
   4. The work deposit must be submitted in the form of an irrevocable standby letter of credit, a bank draft, money order or certified cheque made payable to the "Receiver General for Canada", or any other negotiable financial instrument approved in advance by the Rights Administrator. Failure to receive pre-approval may result in disqualification of the bid. Company cheques are not considered negotiable financial instruments for this purpose.
      
      
   5. Parties submitting a joint bid may submit separate guarantees representing their proportionate share of the required work deposit, within 15 working days. This period commences the day following the notice of winning bids being posted on the Northern Oil and Gas Branch website. The bid representative as designated on the bid submission form will be responsible for collecting and submitting the holders' share of the work deposit.
      
      
   6. As expenditures are incurred exploring the exploration licence during Period 1 of the term, work deposits are refundable pursuant to the Schedule of Allowable Expenditures. Since work deposits represent 25% of the total amount bid for a parcel, refunds are likewise prorated on the basis of 25% of allowable expenditures incurred. Any work deposit balance remaining at the end of Period 1 will be forfeit.
      
      
   7. Expenditures incurred in Period 2 of the term will not be credited against the work deposit as these may be credited against Period 2 rentals.

11. Rentals

- Canada Petroleum Resources Act s.s. 14.3 (c)

Rentals are not applicable during Period 1 of the term.

Rentals paid during Period 2 are refundable at the rates established in the Schedule of Allowable Expenditures.

Refunds may be made or future rentals may be waived, as the case may be, as expenditures are incurred on the lands subject to the exploration licence during Period 2 of the term.

Any rental balance remaining at the end of Period 2 will be forfeit.

In Period 2, rentals will be applicable at the following rates:

Rentals will be payable annually, in advance, and are to be submitted by: cheque payable to the "Receiver General for Canada"; irrevocable standby letter of credit; or other negotiable financial instrument in a form satisfactory to the Minister.

Rentals for the first year of Period 2 will be payable in full even if Period 1 is extended.

When an Exploration Licence continues in force beyond Period 2 due to the drilling of a well deemed to be pursued diligently in accordance with Section 27 of the Canada Petroleum Resources Act, rentals will be payable at the rates applicable during the last year of Period 2. Such rentals will be payable monthly, in advance, at the rate of one twelfth (1/12) of the applicable annual rates.

Rentals may be payable on lands included in a Significant Discovery Licence.

Failure to pay rentals will result in the early termination of the Exploration Licence. Consequently, lands revert to the Crown.

12. Allowable Expenditures

- Canada Petroleum Resources Act s.s. 14.3 (c)

Costs related to exploratory work undertaken as part of a program authorized by the National Energy Board may be claimed AT COST.

Refunds of the work deposits of Period 1 and the rentals of Period 2, will be done in accordance with the Schedule of Allowable Expenditures, which provides an overview of the classes of exploratory work. View the Guidance notes on claiming Allowable Expenditures.

These notes describe the classes and scope of expenditures which may be viewed as allowable under the terms of Exploration Licences issued pursuant to the Canada Petroleum Resources Act in areas under the jurisdiction of the Minister of Indian and Northern Affairs, and are intended to assist an interest holder or Representative of the interest owner of Exploration Licences to claim refunds from the Northern Oil and Gas Directorate of the Department of Indian and Northern Affairs.

13. Acceptance/Rejection of Bids

- Canada Petroleum Resources Act s.s. 15.1

For the purpose of issuing an Exploration Licence, the Minister will choose the highest bid in terms of the single bidding criterion (Work Proposal Bid).

Bids will be accepted only in relation to an entire parcel.

14. Issuance of Licence

- Canada Petroleum Resources Act s.s. 15.1

The Minister is not required to issue an interest as a result of a Call for Bids. The Minister may issue an interest to the successful bidder within six (6) months after the closing date specified in the Call for the submission of bids.

15. Tied Bids

In the event of two or more bids being tied, each bidder involved will be notified of the tie and have the opportunity to submit a new bid in its proper form within a time frame specified by the Department of Indian Affairs and Northern Development, which will not be for more than twenty-four (24) hours after being notified.

16. Notification of Results

Bidding results will be made available as soon as possible following the closing of the Call via posting on the Northern Oil and Gas website.

The identities of unsuccessful bidders and the amounts of their bids will not be disclosed.

17. Related Requirements

The exercise of petroleum exploration rights is subject to specific terms and conditions in effect for the region of the Call and are found in Part A.

Further Information and Contacts

For more information on this Call, the rights issuance process or the resource management regime, please contact:

Lucie St-Jean
Rights Administrator / Registrar
Oil and Gas Management Directorate
Northern Oil and Gas Branch
Department of Indian Affairs and Northern Development
15/25 Eddy Street, 10th Floor
GATINEAU, QC
Postal address:
OTTAWA ONTARIO   K1A 0H4
Tel: (819) 997-0048; Fax: (819) 953-5828
E-mail: Lucie.StJean@ainc-inac.gc.ca

Ursula Beddoes
Manager, Land Tenure
Oil and Gas Management Directorate
Northern Oil and Gas Branch
Department of Indian Affairs and Northern Development
15/25 Eddy Street, 10th Floor
GATINEAU, QC
Postal address:
OTTAWA ONTARIO   K1A 0H4
Tel: (819) 934-9392; Fax: (819) 953-5828
E-mail: Ursula.Beddoes@ainc-inac.gc.ca

For more information on Northern Oil and Gas, refer to our website

Any geological and well information with respect to the lands or area which is available for public disclosure may be obtained from:

Data Coordinator
National Energy Board
Exploration and Production
444 Seventh Avenue SW
CALGARY ALBERTA T2P 0X8
Tel: (403) 292-4800
Fax: (403) 292-5876